Comment: General Mills could find it hard to brew growth with Keurig NPD
General Mills posted video to explain how to use capsules
Food manufacturers seem to be willing to take more risks on NPD, which is encouraging after seeing years of caution and a focus on nostalgia or new packaging formats. However, for those operating in struggling categories, innovation may not solve the dilemma of how to reignite growth.
After a year reporting on the food industry beat, Lehman Brothers collapsed - and so did business confidence worldwide.
One consequence in the food sector was a slowing of the NPD pipeline. Manufacturers became risk-averse and few notable novel ideas emerged. In fact, innovation seemed at times to focus on revitalisation, with the return of products like Wispa chocolate and Birds Eye Arctic Roll frozen dessert, or simply repackaging, with sharing bags or different flavours of a product put to public vote.
In that context, it is interesting - and in some ways - heartening to see food manufacturers increasingly appearing to be willing to try out new or new-ish concepts, even if at first one could be sceptical about the prospects of the new products.
Will UK consumers really take to Adams Foods' cubed cheese product, Crumbles, which is being sold under its Pilgrims Choice brand? Will they see a benefit in buying Crumbles and not simply grating the cheese for their lasagne, say, on a grater?
Adams Foods says the product could "transform" the category and told just-food at the company's HQ in Staffordshire yesterday Crumbles gave a more consistent covering of cheese when it melted, than conventionally grated cheese. We will have to wait and see but one cannot fault Adams Foods for trying to bring something new to a mature category.
Similarly, two giants of the industry across the Atlantic are trying to reignite interest in centre-store products that are core to their businesses but which are struggling for growth.
Yesterday, General Mills said it had developed a product designed to be cooked with a Keurig coffee machine. The company is rolling out Nature Valley Bistro Cups Oatmeal, a product that includes a packet of oatmeal, another of fruit and nuts and a flavour capsule to be brewed in the machines.
The launch comes after Campbell Soup Co. developed packs of soup designed to be cooked in the Keurig machines.
A spokesperson for General Mills told just-food its new line was targeted at "Keurig lovers who want to do more with their brewers".
He said: "We believe there are many Keurig owners that like oatmeal and would eat it more often, but who have not been eating it because it has not been convenient. Our Bistro Cups contain just the right amount of oats, fruits, nuts and flavour to brew the perfect mug of oatmeal every time."
General Mills posted a video plugging the Bistro Cups on its blog, showing how one can mix the brewed flavoured capsule with the sachets of ingredients.
Cereal manufacturers like General Mills are seeking ways to re-boot the category in the US, where sales have been in the doldrums for a number of years. Consumer interest in health and demand for more convenient options has seen shoppers turn instead to hand-held items or products like Greek yoghurt for breakfast. The development of the Bistro Cups is a way, General Mills would hope of creating a more convenient product to eat at home for breakfast
However, one struggles to be positive about the prospects for the product. It is unclear whether the Bistro Cups really meet a consumer need.
"How to complicate a simple task?" one Twitter user wrote yesterday, reflecting on the launch.
"Is it just me, or is this Nature Valley oatmeal actually just adding unnecessary steps for the sake of using Keurig?" another asked.
One could suggest the fact General Mills felt it had to post a video showing how to use the product means it could be hard for the new line to really cut through to consumers.
Campbell's soup capsules could face similar issues. Are the pods fulfilling a need? They are, after all, still soup, a product under pressure in the US for a while now. Will consumer interest in soup be renewed just because they can brew it in a coffee machine.
Again, one does not set to be critical or negative for the sake of it. It is encouraging food manufacturers are more engaged in NPD - and categories like cereal and soup are crying out for it.
However, there are more strategic considerations here for Campbell and General Mills.
Where, long term, does Campbell see soup heading? There is scepticism in the sector about the prospects for the category. Campbell has set out plans to expand its premium soup business - one assumes that the Keurig capsules, should they finally hit shelves as planned this year - will command a certain price point - but some industry watchers have questioned the push.
"I think I have heard Campbell Soup talk about premium soup probably, I don't know, ten different launches. Every single one has failed. So why is this move going to be successful?" Deutsche Bank analyst Eric Katzman asked Campbell at the CAGNY investment conference in February.
With the long-term prospects for soup uncertain, should Campbell look to spin off soup and focus on higher-growth (and newer) assets like baby food business Plum and chilled foods arm Bolthouse Farms, in a similar fashion to the way Dean Foods carved out WhiteWave Foods?
For General Mills, if it is serious about cereal, it should (as should Kellogg) be looking seriously at M&A. The manufacturers are the two largest breakfast cereal players in the US but have, in comparsion to number three manufacturer Post Holdings, been slow to look the parts of the category that are growing.
Post has used M&A to expand into granola, for example. And its M&A ambitions have, as was demonstrated today, not stopped at cereal. Earlier today, Post said it had struck a deal for US egg-to-dairy supplier Michael Foods. In the last year or so, Post has bought businesses in sports nutrition, pasta and peanut butter to diversify its business from cereal.
That is not to advocate General Mills to do the same - it already has a broad portfolio - but more strategic moves in cereal would go further than a confusing-looking tie-up with a coffee machine maker.
General Mills, Inc. - Strategy and SWOT Report, is a source of comprehensive company data and information. The report covers the company’s structure, operation, SWOT analysis, product and service offe...
MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organi...
Synopsis Canadean's "Dean Foods Company : Consumer Packaged Goods - Company Profile, SWOT & Financial Report" contains in depth information and data about the company and its operations. The profile c...
- M&A Watch: Why Danone/Lifeway deal could be next
- Focus: The impact of Heinz's stevia ketchup
- Focus: Gen Mills turns to M&A to bolster US ops
- Shopper trends: Some confidence but promos popular
- Viewpoint: US health food in play - at a price
- Burton's "eyeing" United Biscuits merger
- Premier Foods revamp creates three divisions
- General Mills Q1 profits tumble
- Unilever to boost presence in Nigeria
- WhiteWave to buy dairy-free firm So Delicious